Agenda item

To consider a report of Cabinet regarding the overall financial strategy for dealing with the budget gap to 2025/26 in light of the various options available to the County Council and the high level outcomes from the public consultation exercise on balancing the budget.

The Council considered the report of Cabinet setting out the overall financial strategy for dealing with the budget gap to 2025/26 in light of various options available to the Council and the high level outcomes from the publication consultation exercise on balancing the budget.

In presenting the report the Leader highlighted that since 2018 the Council had repeatedly highlighted that if the funding regime for local government did not change, the Council would not be financially sustainable in the longer term as it could not continue to make savings in other services to fund the demand pressures faced across social care, special educational needs and school transport services.  This position was brought to the attention of Government again in 2022 in the Council’s joint letter with Kent County Council, making it clear that if there wasn’t change in the medium term, the Council would not be financially sustainable, given that by 2023/24 it will have taken £640m from its budgets over the last 13 years.

By 2025/26, based on current information from Government, the Council would be in the position for the first time of being unable to close the predicted two year budget gap of £132m through the identification of recurring savings alone.  The proposals represented some very difficult choices however, the County Council must set a balanced budget by law.

The Leader reported that he would be sending a further letter after the meeting, which he would be asking Hampshire MPs to support, urging the Government to provide more support to Councils in the 2024/25 settlement with a view to fundamentally changing the way that local government is funded in the next Comprehensive Spending Review.  The Leader had also met with a range of other County Council Leaders and it was clear that all were facing the same position.  A joint letter from those Leaders would be sent to the Chancellor to add further weight to the voice of local government.

Despite the challenges faced, the County Council’s financial prudence and the strength of the position of its reserves mean that the Council remains confident that it can balance the budget in 2025/26, assuming there were no further major financial shocks.

The Leader drew attention to the proposed range of stage 2 consultations that would commence in the new year, which would be seeking residents and stakeholders’ views on the options under consideration for changing services from April 2025 onwards.  The Leader encouraged everyone to participate in the consultation exercise.

Despite the challenging circumstances faced, the Leader was pleased to report that the County Council continues to provide some of the highest performing services in the country whilst still investing in new projects, in particular:

·         Children’s Services are outstanding and after 10 years of supporting the Isle of Wight Children’s Services, the County Council would be leaving that relationship in the knowledge that they have the skills and processes to ensure children remain safe on the island and educational standards have increased significantly.

·         £22.5 million investment into highways maintenance and a change of approach to dealing with repairs to the network.

·         Ambitious investment plans to provide new state of the art facilities to help care for vulnerable adults particularly those who suffer from complex dementia.

·         Effective working with the Hampshire Local Enterprise Partnerships
            (LEPs) to ensure a smooth transition of services to the County Council
            in a way that will generate economic benefits to the area in the future.

The Group Leaders responded to the proposals and recognised the challenges that the County Council faced, that savings were not proposed arbitrarily and that the Administration was striving to balance the budget in the most effective way possible.  Concerns were expressed about the approach being taken to commercialism and increasing income; whether spending was being targeted in the right areas, for example refurbishment of the Council Chamber and the upcoming conference on Hampshire 2050; that the Budget Consultation document was complicated and resulted in a poor response rate, and the absence of any reference to Local Government Re-organisation in the report.

During the course of debate many Members commented on the unenviable task and difficult choices the County Council faced.  Views were expressed about the impact the proposals would have on people with disabilities and mental health difficulties; the effect of lobbying and whether enough support was being received from Hampshire MPs, and the unintended consequences that would arise from the proposals.  Concern was also raised about the future of some services for children such as school transport and special needs support.  The importance of not reducing the quality of the services provided by the County Council was also highlighted.

The County Council had continued to manage its reserves well, the intended purpose of which was to use when needed.  It was noted that some of the Budget Bridging Reserve (BBR) would be used to balance the budget in 2023/24 with further use of this reserve earmarked for 2024/25.  However, it was clear that a change to how local government is funded was urgently needed.  It was noted that the County Council continues to have one of the lowest council tax rates in the country despite having one of the lowest funding levels.

Executive Lead Members highlighted the increasing demand for adult social care and the consequence of demographics in terms of age, disability and mental health challenges was having a significant impact on the budget.  Recognition was given to the robust commissioning of contracts in this regard and the excellent partnership work carried out by County Council officers with the NHS.  There were many innovative initiatives, some involving automation and use of technology, that were achieving positive outcomes whilst reducing costs.  In terms of innovation, other initiatives were being considered in other areas such as thermal patching of roads, which is quicker, more cost effective and environmentally friendly; the way in which highways are managed, how highway teams operate and the re-use of items that are taken away from roads.  School crossing patrols were being looked at carefully with focus remaining on the safety of children.  Genuine cost savings had been achieved in Children’s Services by changing the way services are delivered to achieve better outcomes for children and young people.

The Leader spoke in reply to a full and thorough debate and he thanked all Members for their contributions.  In response to comments about lobbying, the Leader emphasised the positive effect the joint letter with Kent County Council had achieved resulting in the significant outcomes in the Autumn Statement, and in particular the County Council’s social care budget.  The Leader also reported that several Hampshire MPs had raised awareness of the County Council’s situation in the House of Commons together with lobbying on policy matters such as home to school transport.  Meetings with the local MPs had been held at which the County Council’s situation had been made very clear, including discussions as to how the local MPs could help.  Despite the current landscape, focus would continue to be on the County Council doing the very best it could in the delivery of its services and protecting its most vulnerable residents.  In conclusion, the Leader recognised and thanked the County’s Councils officers for their hard work during very difficult and challenging times.

The Chairman confirmed that the recommendations would be taken separately with a vote being held on each.  For each of recommendations a) and b) the majority of Members present voted in support and those recommendations were carried.  For recommendation c) Councillor Keith House requisitioned a Recorded Vote in accordance with Standing Order 22.3 and 10 other Members rose in their seats to signify their support.  The outcome of the Recorded Vote of those Members present in the meeting at the time the vote was conducted was as follows:

FOR (46):

Councillors Adams-King, Bowerman, Branson, Briggs, Broomfield, Bryant, Burgess, Carpenter, Chadd, Rod Cooper, Curnow-Ford, Davies, Donnelly, Drew, Dunning, Forster, Glen, Harvey, Hayre, Henderson, Heron, Huggins, Humby, Jackman, Joy, Kemp-Gee, Kendal, Latham, Lumby, Mans, McEvoy, Mellor, Mummalaneni, Kirsty North, Phil North, Oppenheimer, Parker, Penman, Philpott, Quantrill, Stallard, Still, Thacker, Vaughan, Warwick and Withers.

AGAINST (22):

Councillors Bains, Chegwyn, Collett, Mark Cooper, Craig, Crawford, Dowden, Groves, Harrison, Hiscock, House, Irish, James, Pankhurst, Park, Parker-Jones, Porter, Price, Taylor, Tod, Tustain and Wade.

ABSTAIN (1):

Councillor Andy Tree.

RESOLVED:

With reference to the report annexed to this Council report, that the County Council approved:

a)    The Q1 report on treasury management activity at Appendix 1.

b)    Delegated authority for the Director of Corporate Operations in consultation with the Leader and Chief Executive to allocate up to £5m from the Invest to Save Reserve to support Directorates in implementing their SP25 proposals.

c)    The savings proposals in Appendix 2, subject to further consultation and executive decision making where necessary.